DGGI Gurugram arrests 3 for input tax credit fraud

The Directorate General of GST Intelligence (DGGI) Gurugram Zonal Unit (GZU) on Wednesday arrested 3 persons including the mastermind, commission agent and CA in the racket of fictitious firms involving fake Input Tax Credit (ITC) of 121 crores, the Ministry of Finance said.

As per the statement released by the ministry, the three accused were arrested on the charges of creating and operating multiple fictitious firms on forged documents and passing large amounts of fake input tax credit by way of issuance of invoices without any actual receipt or supply of goods or services.

"From the investigation conducted to date, it has been established that one of the arrested persons have created at least 13 firms and has been involved in availing and passing on of a total fraudulent ITC of Rs 121 crore," the statement said.

It has also emerged that the person who had created the fake/dummy firms worked in tandem with a commission agent, who used to sell these goodless invoices to established firms for commission, both directly and through different brokers. The commission agent has also been arrested.

Further, in this chain from the financial movement, it has emerged that established firms (end-users) would make transfers to these fake firms, from where the amounts would then be transferred to the account of a private limited company from where the CA in question would withdraw and return the said amount in cash after deducting the commission of his company as well as his own commission. The amounts of cash transactions ranged around Rs 30-40 lakh per day.

The investigation spanned multiple locations and based on verifications, evidence and statements recorded, it has appeared that these three persons: the creator of the fake firms, commission agent and the CA were operating in tandem orchestrating this racket of making fake firms on forged documents and having passed on fraudulent ITC amounting to Rs 121 crore so far, the ministry said.

Accordingly, they were arrested under the provisions of Section 69 read with Section 132 of the CGST Act, 2017 on September 13 and produced before Chief Metropolitan Magistrate (CMM), Delhi who ordered 14 days of judicial custody.

Further investigations in the matter are in progress.

( With inputs from ANI )